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| Applications for refinances reversed direction and rose — fueled by four weeks of falling rates. But a forecast from the real estate finance industry sees a surge well past six percent in subsequent quarters.
The average 30-year fixed-rate mortgage nudged down two basis points within the past week to 5.78%, according to Freddie Mac’s Primary Mortgage Market Survey released today. While the weekly decline is minimal, the average is down more than a quarter percent since last month. Down three BPS from the prior week, the 15-year average came in at 5.33% this week, Freddie said. The current 0.45% spread between the 30-year and 15-year has reportedly tightened from 0.66% at this time last year. The 5-year Treasury-indexed hybrid adjustable-rate mortgage averaged 5.20%, Freddie said, slipping two BPS from last week. The largest decrease — five BPS to 4.21% this week — was reportedly seen in the 1-year Treasury-indexed ARM, marking the second consecutive weekly downfall. Meanwhile, the ARM share of applications edged down for its second weekly decline to 35%, according to the Mortgage Bankers Association’s latest application survey, which reflects data one week behind Freddie’s survey. Freddie chief economist, Frank Nothaft, said this week’s downward drift in rates was a result of markets believing inflation is in check. “The market was disappointed on the news of lower consumer confidence and lower orders for durable goods,” he said in a written statement. “These numbers suggest that the Fed will remain restrained in its practice of raising short term rates, which may be an indication the Fed doesn’t see inflation to be as great a threat as the markets previously had thought it would be.” That seemed to be the notion with the mortgage “experts” surveyed at Bankrate.com. For the past three weeks, a majority of the panel believed rates would rise, but this week the votes were evenly split between those (40%) who predicted rates would rise over the next 35 to 45 days and those (40%) who thought they’d remain unchanged, while only 20% foresaw a downturn. Late Thursday, the 10-year Treasury-note was trading at a yield of 4.17%, down 10 BPS from last week, and a price of 98.63. MBA, however, does not believe rates will sustain their current behavior for long. Its latest mortgage finance forecast, has the 30-year average climbing to 6.4% next quarter and ending the year at around 6.6%. Falling rates generated more traffic at mortgage shops. Application activity improved 6% from the prior week due to a 3% increase in purchase money requests, but mainly because of the 10% rise in refinance application activity — which is at its highest level since early last month, yet 15% below its level a year ago, MBA said. The spike in refinance activity reportedly nudged the refi share of applications just above 39%. |
